Hotchkiss Company Has Two Support Departments, Maintenance Department (MD) and Personnel

question 93

Multiple Choice

Hotchkiss Company has two support departments, Maintenance Department (MD) and Personnel Department (PD) , and two producing departments, P1 and P2. The Maintenance Department costs of $90,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $9,000 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $36,000 and $60,000, respectively. Data on standard service hours and number of employees are as follows: $\begin{array}{lcccc}&\text { Maint. }&\text { Person. }&\text { Dept. }&\text { Dept. }\\&\text { Dept. }&\text { Dept. }&\text { P1}&\text { P2 }\\\text { Standard service hours used } & 400 & 200 & 1,200 & 600 \\\text { Number of employees } & 20 & 40 & 180 & 180 \\\text { Direct labor hours } & 200 & 200 & 1,000 & 1,000\end{array}$
What are the total overhead costs associated with P2 after allocating the Maintenance and Personnel Departments using the direct method?

• A)$48,000
• B)$90,000
• C)$94,500
• D)$99,000

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